Banks now face competition from payment platforms — World Bank

TheEdge Tue, Nov 14, 2023 05:16pm - 3 months View Original

SUBANG JAYA (Nov 14): The banking industry is currently facing competition from payment platforms that did not start off initially as banks or payment platforms, the World Bank Malaysia lead economist Apurva Sanghi said.

Citing the likes of Grab, now the first digital bank approved to start operations in Malaysia, and Indonesia’s Gojek, he said both started off as ride-hailing apps.

He said these platforms are now moving fast into conventional banking territory of determining borrowers’ creditworthiness by leveraging “data as collateral” and further disrupting banking.

“These platforms are much faster and cheaper than conventional banks.

“The benefits from competition are there for everyone to see — interchange fees have started coming down; costs of remittances have come down; and even the mighty SWIFT has reduced its messaging fees,” he said in his keynote address at the ASLI Banking and Finance Summit 2023 here on Tuesday.

Apurva said the other disruptive threat faced by banks is from central banks in the form of Central Bank Digital Currency (CBDCs).

“CBDCs are basically digital cash but provided directly by central banks to citizens.

“This is disruptive in that they could lead to dis-intermediation by pulling deposits out of the banking system, and by putting central banks one step closer to citizens and possibly diluting their ‘bank-of-all-banks’ role,” he added. 

The summit was jointly organised by the Asian Strategy and Leadership Institute (ASLI), the United Nations Sustainable Development Solutions Network and Sunway University.

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